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Investing in firms developing life-changing medicine

Significant developments in the biopharmaceutical industry may emerge by the end of 2023 as certain companies find breakthroughs and push technology advancements that help extend life expectancy or improve quality of life, says Fidelity Portfolio Manager Paul McElroy.

“Companies are looking to treat or eradicate cancer, Alzheimer’s, and other diseases, and they are building off technology developed at a breakneck pace during the COVID-19 pandemic to make groundbreaking therapeutic progress,” says McElroy, who co-manages Fidelity® Healthy Future Fund (FAPHX) with Melissa Reilly.

Launched in May 2022, the fund is a thematic equity strategy dedicated to investing in global companies that are extending and improving life expectancy, enhancing health and wellness in people’s lives, and managing environmental impacts that are causing negative health outcomes.

Among high-conviction holdings as of August 31, McElroy cites Eli Lilly (LLY), Moderna (MRNA), and DexCom (DXCM), all of which are developing treatments for chronic and, in some cases, rare diseases. He adds that these advances may be especially life-changing in emerging nations where health care is not as widely available.

“Each is set to announce pivotal trial results this year and/or product commercialization in the near term,” McElroy says.

In May, Eli Lilly reported phase 3 trial data for a treatment for early-stage Alzheimer’s disease, and the results showed a reduction in risk of progression to the next stage of the disease, according to McElroy.

Meanwhile, Moderna is applying its mRNA technology to rapidly develop vaccines across several areas. McElroy notes that the company has already shown fairly strong phase 1 data for one aspect of a 3-in-1 combination vaccine to treat respiratory-related ailments. Moderna also has a personalized cancer vaccine in phase 3 trials with adjuvant melanoma patients and expansion to additional cancerous tumors.

“Moderna’s approach to cancer treatment is personalized, simple, and rapid, progressing from biopsy to cancer vaccine administration in a matter of weeks,” he says.

Medical device maker DexCom is pushing forward with its insulin-therapy solutions to transform management of Type 1, Type 2, and gestational diabetes, which impacts roughly 11% of the U.S. population, according to the American Diabetes Association.

McElroy notes that DexCom’s latest device iteration, introduced this year, allows for real-time and continuous glucose monitoring, without finger sticks, and delivery of insights from a discreet sensor to a smartphone or smartwatch. This helps users manage glucose to avoid a hypoglycemic event, he says, adding that both Medicaid and Medicare cover the device.

“Melissa and I focus on companies that are leading the way in the research and development of life-changing medicine, and we are excited about these and other prospects,” says McElroy.

For specific fund information, including full holdings, please click on the fund trading symbol above.

Paul McElroy
Portfolio Manager

Paul McElroy is an Environmental, Social, and Governance (ESG) analyst in the Equity division at Fidelity Investments.

In this this role, Mr. McElroy is responsible for providing ESG research coverage for the consumer staples and discretionary sectors and works closely with portfolio managers and analysts to integrate ESG investment strategies and proprietary research signals into Fidelity's investment process. In addition, he serves as co-manager of the Fidelity Healthy Future Fund.

Prior to assuming his current responsibilities in 2018, Mr. McElroy was an internal consultant focused on process improvement and operational efficiency within Fidelity's investment operations teams and held a role as a business analyst on the Fixed Income division's money market trading desks recommending new issuances for taxable and tax-exempt funds. He has been in the financial industry since joining Fidelity in 2006.

Mr. McElroy earned his bachelor of science degree in finance from Bentley University and his master of business administration degree with a concentration in finance from the D'Amore-McKim Graduate School of Business at Northeastern University.

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